♪ rishaad: it is wednesday the 23rd of march. this is "trending business". i am rishaad salamat. ♪ 9:00 a.m. and hong kong. we are live. here is a look at what we are watching. markets shrugging off the terrorist attacks, japan the biggest loser. security questions at the heart of europe, that bombing sending

concern around the world. milking it, doubling first-half profits despite low dairy prices. dividendsging forward , the best way to help farmers. follow me on twitter @rishaadtv, include #trendingbusiness. markets getting underway in half an hour. david is having a look at sentiment. david: it is risk off, not a rush to the exit. when you look at markets in europe overnight into where we are at the moment, mostly flat. holding theiry, ground in light of events in europe. asia at the moment, most markets on the way down.

it is flat, volumes down. , likeg moves yesterday the drop in the pound, weakening avethe japanese yen, h held flat. taiwan comestoday, out with factory output after lunch. we are expecting to see a contraction there. singapore with inflation numbers at 1:00 p.m. local time, 16-month to see a dropped there. mostly speaking, big picture, nothing much happening. the next waiting for big catalyst to guide them forward. rishaad: big talking point today across the world, how will

europe response and the attack in brussels. update, 11, a strike creating chaos among travelers. another explosion on a busy subway line, 20 killed there. wounded has topped 230. let's get over to brussels outside the eu commission building near the train station where one of those attacks happened. what do we have and what do we know now? attack is the deadliest ever on belgian soil, targeting civilians. first of the airport on tuesday morning, then one hour later in

the heart of europe, just near here, near the eu commission and eu council, where eu leaders met a few days ago. what we know so far is that one man is still at large. the belgian police have released his picture on their twitter account, wearing a hat, glasses, and a white jacket. the police have called everyone , whoay have seen this man may have found some amateur footage, to send it to the police to help with the investigation. two men wearing black clothing on the left, also seen at the airport. these men are believed to have blown themselves up, according to what we have from the belgian prosecutor. we also know from a rate that

happened later in the afternoon and brussels that the police a islamic state flag, and chemical products. rishaad: has brussels gone on lockdown? streets,just on the very empty. in fact, the security around the commission building has been removed. there are no soldiers currently in front of the eu commission, but there are lots of checks at the borders, at the airport. the brussels airport will remain closed for passengers on wednesday, some operating for cargo. to london and amsterdam should be running as normal on wednesday.

the trains to paris, as well. the schools will be open. the belgian prime minister said he wanted to get things back to normal as quickly as possible. we want to do everything in order to succeed as quickly as possible and returning to a normal life. this morning, freedom was hit in the heart and brussels, as it was a few months ago in paris, or earlier in london or in spain. however, the foreign minister and brussels said earlier that othernot rule out that accomplices are still at large, so we cannot rule out further attacks. ago,ct, just a few minutes issued aic state statement saying more attacks may be coming on the countries

against islamic state. linkages have of been drawn with those attacks and paris you were covering four months ago, is there any news on that? >> at the moment, no official , where therussels belgian government and officials are saying that there is a link. it is hard to tell whether there is a link between this attack and the paris attacks. everybody'sis on mind that just four days ago and brussels on friday night just , the onlyeu summit surviving terrorist of the paris attacks was arrested on friday , so thed brussels investigation, according to the belgian prosecutor, is also going to focus on these possible links. rishaad: thank you.

is a, right barton professor at deacon university. he joins us from melbourne by webcam. let's start off with is. this move and brussels and the attacks and paris represent a tactical change in what they are doing? >> good question. that change was coming throughout last year. when we sought those three paris, andankara, , thewas the paradigm shift islamic state going into al qaeda territory, if you like. at the end of last year, they stepped up with directed attacks using military style assaults and military weapons. we had subsequent attacks, two in istanbul, one in jakarta, and

now brussels. we have never seen a terrorist group that has had so much resilience and capacity to rebound and operate on so many fronts at once and so much technical sophistication. belgium is not in the coalition fighting is. why brussels? >> it has to do with social networks. we are dealing with a particular problem in a particular section of the moroccan community. these are social networks around petty crime as much as extremism. you have had that taking hold of the islamic state network. that is where these guys are.

the thought is it was those same friends, those who launched the attack and brussels, so it is a case of where the people are. they traveled from brussels to paris to launch an attack there, paris as a bigger prize. the attack has the hallmark of something rushed and they did what they could do before they were arrested. that seems to be the pattern. rishaad: there seems to be a feeling that the net was tightening in brussels. where is this coming from? where is this radicalization and belgium coming from in particular? is it because disenfranchisement? what is the deal? elements ofose alienation, high youth unemployment, kids who don't see angry with the system, even with their own community, but that by itself

does not produce terrorists. there have been people who have come in and befriended them and struck up friendships within their friendships. islamic state has guys in the back office, intelligence, military leaders, who know how to recruit, manipulate, and that's the level of competency we're seeing with islamic state, a global network of recruitment. not so much seen in north america at the moment, but very much seen in northern europe, and now showing signs of picking up in southeast asia as well. it is about exploiting friendship circles. it helps when you have alienation and local push back. ,aving achieved a caliphate islamic state is a strong brand with drawing power for young people looking to align themselves with something. for kids with nothing else in

their lives, that is an attractive draw once they have been befriended in the social networks. rishaad: what are the political ramifications for europe, europe's borders, and for the refugee crisis as well? >> europe is quite correct to say they will pull together. that is a good response. when the belgian prime minister it is anut a war, understandable response, but language that is not helpful. after soft is going targets, and by definition you cannot harden a soft target. state is going after soft targets, and by definition you cannot harden a soft target. you can remove the vulnerability downstream, check people at the entrance, but then they will be lining up outside. you have to work on intelligence, and engage with community groups, winning the trust of families who might

see something going wrong in the neighborhood, and the belgians have not been good at that. all of us need to learn how to do this better. it is not the knee-jerk reaction of going tough that will give us the results. it is the soft approach of engaging with communities and working together on common interests. parents are worried about losing their kids to radical recruiters, but they also feel they cannot trust the authorities. we have to overcome that. rishaad: thank you very much. well, you can continue to follow our coverage of the brussels attacks on a website, bloomberg.com/asia. of theave a look at some other stories we are watching for you today. the shakeup at switzerland's second-biggest bank. >> that's right.

credit squeeze plans to speed up and deepen cuts to its investment bank. that move could be announced as soon as today. we're also told the company might update investors on first quarter earnings. in october, they announced a strategy shift. the ceo has been trying to instill confidence and boost rough at ability. one focus is going above management while scaling back. it has been a tough time for banks, and some have warned shareholders about a drop in revenue from trading and deal making. after the plunge and oil and gas scraps thereide liquid natural gas project. forced energy companies to cancel or delay investment plans.

billion of400 proposed energy projects have been delayed since mid-2014 and pushed the next year or later. woodside is the second largest oil and gas producer. policy airline has a that is likely to boost its profit. , chinacalled big three air, air china, china southern, and china eastern, will follow the report and a sweet, a surge of 70% in net income. plunging oil prices have helped cost. cathay pacific and singapore airlines reported hundreds of millions of dollars from hedging losses last year. at the same time, a weaker currency has seen airlines trying to cut dollar-denominated debt. rishaad: the world's biggest dairy exporter doubles its first-half earnings. next, discussing the yuan policy.

this is "trending business". ♪

rishaad: many of the world's top leaders in business and finance are in china for an annual forum. an overriding concern will be how to mitigate the fallout from china slowdown. take it away. >> good morning. we are on the sunny tropical island in southern china at the forum for asia, our 13th visit in a row for this forum, which comes on the heels of the national people's congress in beijing, where we got direct us on policy and the state of reform. to further that discussion, we are bringing in a senior fellow at the peterson institute in washington dc. thank you for your time. you have a recent book.

much has been made of the reform agenda of state owned enterprises in china and the so-called bested interest perhaps blocking the pace of reform given the slowdown in the chinese economy. you don't think that is as a big of a concern as others. >> it is easy to overestimate. they have indicated a plan to reduce the size of employment and the oversized industries. the key thing is whether or not they move ahead on that plan. not all plans have been carried out on a timely basis. that is the key thing. job growthheard that and maintaining employment is a key objective, 10 million new that but the prospect state owned enterprises will have to cut upwards of 1.8 million jobs and through urban workers onto the streets, this is not something they want. you also downplayed this.

>> it has to be put in to context. you lay off 1.8 million, that s than one half of 1% of the urban workforce. some may be eligible for retraining so they can go into the service sector, which is creating a lot of new jobs as services becomes a bigger component of the economy. >> you don't believe the state owned enterprises have as much clout as everyone says they has. >> they employ a relatively small amount of the labor force. there are leaders who benefit from state owned enterprises, so they will not want to give up the benefits they get. the thing to keep in mind is that if you take all state owned enterprises, they only employed 10% of the urban workforce. the state companies were employing 30% of 40% of the urban workforce 13 years ago, so

the scale this time around is less. and theotential fallout comparisons to the early 1990's, when there was disinvestment in the north, it is a different kettle of fish. >> there are some similarities. it does not mean they will do it as quickly as they should, and we will find out if president xi jinping will go fast or slow. >> what about the rise of debt and the risk to banks? >> it is one of the biggest risks facing china today, because the build up of debt is heavily concentrated in state owned companies. >> we will be right back. ♪

>> welcome back to bloomberg

television and our ongoing coverage. we will continue our conversation. we were kind of cut off in our conversation about the bank , and aith the debt loads lot of that build up been with state owned enterprises, which gets favorable loans from the banks. is there a banking crisis in the works? >> there is a potential. the risks are manageable, but accumulating. the slower they go on reform -- a lot of as so ease are doing it to cover their losses. debt, the buildup of more exposure and the bigger the risk, so that's why it is imperative that they move aggressively on this reform program for state owned enterprises. >> you think there is a reform process going on with the state owned banks, more commercially driven, really?

lending more to be to the private sector than the state sector, but the funds going to the state sector are disproportionately large. they are getting a bigger share of the credit, so even though it is less, it is still too big, and particularly to big since the funds are not being used to expand, but cover operating losses, which means the debt is piling up. there is little prospect of paying it back. over the lastlk six months since that did i wish and of the yuan in august, hedge funds said china with devalue earlie further. >> i don't think they will devalue further. their share of global trade is going up. before they join the wto, there were 4% of global exports. last year, 15%. they are still running a huge current accounts surplus, 300

billion u.s. dollars, one of the largest in the world, so these two indicators suggest that they are doing well on trade. the growth has slowed down, but that is because the global economy has slowed down. >> don't read against the house. -- don't bet against the house. thanks so much for your time. back to you. we're just getting started here. rishaad: thank you very much for that. it's the world's biggest dairy company, continuing to milk big profits, having a look at that. we break down the numbers and look at all the market action. we have a look at what is going on out there. asia-pacific equities between , the auctionses time coming to an end for hang seng, futures flat.

nikkei 225 with the rise of 2/10 of 1%. market updates and the latest on fonterra when "trending business" returns. ♪

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the flower power cruise, february 27th, 2017. let your freak flag fly. don't miss the grooviest trip at sea. rishaad: a look at our top stories, terrorists strike the heart of europe, but equity markets shrug it off. coordinated explosions killing at least 31 people during tuesday mornings rush hour in brussels. european leaders promise a united front against islamic state. sources telling us that credit sse will- credit sui be making deeper cuts.

companies looking to hedge against currency declines fxf never before business jumps. chinese companies protecting themselves. we have that market open in shanghai. a slight movement when it came to the futures contracts. manila opening up with trade data playing out there. >> it came out 30 minutes back. i will flesh that out for you in a few moments. just to give you a sense of where risk appetite is that, a strong argument that the initial reaction to the attacks in brussels yesterday limited. gold, two-banged today chart.

that was a flight to safety. -- let me show you gold, a two-day chart. that was a flight to safety. equity markets looking lower across the region. philippines, massive search record trade, a billion for the month of january. chinese markets opening up, not injecting 80 pboc million renminbi. were seeing weakness across both these markets. something to note as we go through our trading session, a few big names report earnings

from the close yesterday into this morning. a few more big names due out at some point throughout today's trading session. just to take you through some names ahead of those numbers. have a look at some of these other names coming out with earnings today. again, reaction to what happened yesterday is fairly muted. it does seem that stocks are fairly resilient. rishaad: thanks a lot for that. attacks, 31e terror dead and 230 wounded. let's get back to the belgian capital. what are we expecting to happen today? >> we expect first the belgian

police to keep this manhunt underway, the police release the picture of this man wearing a white jacket. himwhite man, as they call in the investigation, because he was standing next to two men and black, who are believed to have blown themselves up at the airport on tuesday morning around 8:00 a.m. brussels time, so they will be searching, questioning witnesses. the belgian police has told media to be careful not to release too much information about the location of the raids. we know that earlier in the afternoon during one rate and the neighborhood in brussels, about 15 minutes north of the , where thearter second explosion took place at -- during thaton

investigation, raid, they found a bomb with the nails inside in order to provoke the maximum damage along with an islamic state flag. that is what we are expecting today. we also expect the fbi to send a team here to brussels, and we expect many officials to react. the prime minister of france is going to come around midday today. rishaad: you've been out on the streets. what is the security like there? earlier onas driving tuesday from paris to brussels, because of course there were no trains to get here, no planes to get here, the airport was close, the trains were not running, either from london or from paris, so we had to drive. securityrder, the checks were not that important, but since then they have been reinforced at the borders, police officers checking more

often the cars that are going through the borders. today, at the moment, the streets are empty. quarter around the eu has been removed, and the year old star trains will run again today. brussels airport will remain close. r trains will run again today. brussels airport will remain closed. there has been an outpouring of grief and support on social media. saw facebook reactivate that safety check feature they have. in fact, two of my friends were marked safe. juliette: this is a really important feature that facebook has initiated. anyone with an account can be sent a message if they are in an

affected area of an attack. all they do is have to replied that they are safe and that will prompt a status update. that happened quite quickly. hashtagalso seen a trending, allowing people who need a safe house to know that that is a safe house and they can go in there while terror attacks are occurring. europef the monuments in in solidarity, the eiffel tower, similar to what we saw in paris, landmarks lithose up in the belgian flag to show support. the belgian prime minister tweeted quite quickly following the attacks saying, they will defend and protect our values and freedom, but confronted by barbaric enemies, we are

determined and united. a number of other leaders as well tweeting their support. rishaad: thank you very much. let's have a look at foreign exchange markets. they did bear the brunt of the impact from those attacks. were noticing an interesting trend, aren't we? where is she? i think we can have a quick look at some other stories while we get set up on this. the next challenge for china's leaders, they could be facing slowing wages as the economy slows. wages will rise less than 7% this year. one province has frozen its minimum wage for two years. and, as ad champion

way to transition to a consumption led economy. borgia force -- deutsche shareholders considering a counter bid. boerse's shareholders considering a counter bid. dollarength of the u.s. reducing the value of nike's foreign sales. one bright note, china still booming despite the slowdown taking place in the country. to looking atback an interesting trend when it comes to foreign changes in the wake of those attacks in brussels. >> let's take a look at how stocks react when this happens. when we have a high-profile terrorist attack, we only see a

knee-jerk reaction. years, and you5 can take a look at 2001 in new york, this plunge in stocks, and , ahappens in jakarta knee-jerk reaction, but what happens is that markets group resilient and after a few weeks or months, they do recover. let me take a look at the short-term impact of all of this. forext comes to the markets, we will see a knee-jerk reaction, and that's what we saw with the british pound. .e saw the pound taking a hit that also comes with speculation that it might be better for t the european union, so speculation on rigs it affecting the pound, which fell against most of its major peers.

let's take a look at the dollar index as well. we had some flight to save havens, a spike when the brussels attacks happened, but they did fall against major peers after -- when we go back six days. meeting, taking a hit, but recovering since then. let's take a look at the japanese yen as well. we are seeing a bit of a movement there. dollar-yene saw the fall quite sharply there, but as recoveringgressed, slightly and is currently strengthening slightly compared to three days of losses. rishaad: thank you very much for that.

the world's biggest dairy company, fonterra, net income of more than $270 million. considering the collapse in dairy prices, how did fonterra achieve this? means cheap prices for value added tax like cheese. , downle news for farmers to $3.90 in new zealand, farmers need $5.30 to break even, so struggling. fonterra is bringing forward its dividend payment $.20 a share in april, with two more installments to come in may and august with the company expecting the dividend to grow to $.40 for the full year. that should help the farmers struggle with these weak prices, which fonterra does expect recover later in 2016.

in the meantime, a still a .for fonterralian wanda rishaad: bring us up-to-date. here,ittle history lesson last year, somebody threatened productsinate fonterra with poison, a controversial pesticide in new zealand. own a rivald man pest-control product and initially denied the charges, but later admitted them when he was confronted with the dna evidence on the threatening letters he sent. he was sentenced today, eight and a half years in jail. the prosecution asked for more, but the judge said that he posed a major threat to trading relationships between new zealand and other countries. rishaad: thank you for that.

, the challenges and opportunities in china. next, the challenges and opportunities in china, right after this. ♪

>> it is 945 in hong kong. -- it is 9:45 a.m. in hong kong. ukraine has proposed a prisoner swap with russia after one of its officers was sentenced to 22 years. the pilot was convicted of complicity in the death of two russian journalist in ukraine in 2014. she claims she was kidnapped i russian backed rebels. ukraine's president is ready to send to bank shoulders if moscow returns the pilot. brought the streets of jakarta to a standstill in a protest against ridesharing mobile apps. the drivers union says as many

as 20,000 cars, buses, and barricaded the cities hub. the president has called for calm, tsonga transport minister is working on a compromise. whoformer toronto mayor admitted to smoking crack cocaine while in office has done from cancer at 46. ford drew worldwide attention when a video emerged showing him smoking the drug. after initial denials, he admitted substance abuse problems and entered rehab. ford ran for city council in 2014 and one and a landslide, despite his illness. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. china's market has januaryd some 13% since

lows, but the comeback is not convinced many skeptics. our next guest remains overweight when it comes to chinese equities. thank you for coming. where is this positivity coming from when there is so much pessimism? >> china is such a large market. we strongly believe in the long-term prospects of it. rishaad: what do you believe in in particular? week getsonaire every created, 40 million new consumers coming to market every year, one of the largest importers of resources. it is such a large economy, and the economy itself and the shape of it is changing as well. wealth gets created more often than anywhere else than the world -- else in the world. rishaad: where do you invest it? do you see equities as something reflecting the fundamentals? quite often they just don't. >> in china, a lot of the wealth

is tied up in entrepreneurial activities, so a lot of chinese investors are already long. has never been better for us to come in with global advice to help them monetize assets and diversify their assets pool. the market itself has rebounded. we believe in it and are buying back the market. rishaad: does that mean you're going there? >> we have just opened our shanghai branch. we will build out our onshore presence. china, we want to be as close to our clients as possible. we will double our headcount over the next couple of years. we will bring hundreds of people into this domestic market. rishaad: what are the numbers? >> hundreds per year. rishaad: you mentioned hong

kong. , lot of wealth managers investment bankers, have had a tough time of it here. is there more of a next is to ex inue? -- more of an it to continue? >> i believe we have seen the bottom, and the market now normalizes. you also saw the national people's congress has reconfirm the growth number. i think this is a market expose a long-term anyway. to pick stocks is never a good strategy. we know the range when we look at a growth target. equates to 12% or 14% a decade ago. >> the sheer size a decade ago was much smaller.

as nominal value that is about the same. we shouldn't forget that china grows two times or three times as fast as gdp, and wealth grows twice as fast as the underlying economy, so that's a double digit growth opportunity already. rishaad: tell us about the risks. where you looking to expand? >> it is great for china. it is one of our focuses. the other is singapore. we can see there is more struggle and southeast asia as we speak, and i think it would take quite some time. we have a clear path in china or greater china. what you talking about in southeast asia? >> our priority is clear, singapore domestic, then all the surrounding countries. we do like japan a lot as well.

japan has been a good market for us. market.the austrian tell me about japan. a lot of people have been criticizing abenomics. >> it is hard to get it going. they have tried for many years. nobody thought they would introduce negative rates. they did. they tried to put inflation back into their target range. a lot of the wealthy japanese want to diversify and use their currency, because they expect the currency to weaken. rishaad: globally, this bifurcated world where we saw some countries tightening, but negative interest rates. how does that impact what you do? >> quite dramatically. today, the markets are influenced by central bank intervention. even the u.s. is slowing down on

its path to increase rates. the europeans with their programs. you see it in japan. that adds a lot of volatility into the market. sometimes it overshadows the fundamentals. time has never been greater for our clients. ,e try to have a view investment strategy, and try to stick to it and bring it to our clients. rishaad: thank you for that. this is "trending business". two.e back in ♪

the world's premier art show in hong kong this week. ubs became the lead partner of art basel in switzerland, now supporting it in three major locations.

switzerland, miami, and hong kong. what does sponsoring an event like this give you? >> it is a huge passion for our clients. our clients into an asset class. best, it is the testimonial of our contribution to society. last point, we own one of the largest contemporary art collections from the corporate branches,layed in 850 so we are an actual participant in the art market. we are doing it for 20 years. we are proudo be here, and it is something that resonates well. rishaad: it is growing all the time. how is it this year? what is it looking like? like theually looks display less, but higher-quality, giving the art more room, which is what they aspire to do, but you're right.

it is over 200 plus galleries, thousands of pieces, and it becomes more and more global. i remember my first visit, very domestic, so to speak. theit becomes global, leading platform that we are proud to be a part of. about whether you fall in love, and for me art is not an asset class. you shouldople say buy something you really like. don't look at it in any other way. >> of course that is what everybody says, but while money gets worth less due to the fact that everybody is printing money , there is a huge demand for art. ann you look at it as investment, the liquidity of the art market has its own dynamics. that is why i would not call it an asset class. rishaad: that is all we have time for. thank you very much. we have to take a break.

we will be discussing those tragic attacks in brussels. we have more on that. "trending business" back in a couple of minutes. ♪

>> from our studios in new york city, this is "charlie rose." charlie: how is it to be back in this house? lin-manuel: very normal. i live a few blocks away. i have been here since i was one-year-old. charlie: this is a house of memories. lin-manuel: it is. this is a house of memories, of ghosts. it was a laboratory for me. i have filmed so many action movies where we are sitting. i have filmed so many animated movies with them i g.i. joe